Press Release No. 14/400

Press Release: IMF Executive Board Completes the Fourth Review Under the Stand-By Arrangement for Tunisia and Approves US$217.5 Million Disbursement

August 29, 2014

The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Tunisia’s economic performance under a 24-month program supported by a Stand-By Arrangement (SBA). The completion of the review enables an immediate disbursement of SDR 143.25 million (about US$217.5 million), bringing total disbursements to SDR 716.25 million (about US$1.1 billion).

The two-year SBA in the amount of SDR 1.146 billion (about US$1.74 billion, or 400 percent of Tunisia’s quota at the IMF) was approved by the Executive Board on June 7, 2013 (See Press Release No. 13/202).

In completing the fourth review, the Executive Board approved the authorities’ request for modification of the end of September 2014 performance criteria.

Following the Executive Board discussion on Tunisia Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, said:

“Tunisia is set to complete its political transition with the advent of elections in the last quarter of 2014. Progress in the transition is helping galvanize support from development partners.

“Nonetheless, the economic situation remains difficult. Growth is timid, unemployment remains high, and rising external imbalances are putting pressures on the exchange rate and reserves.

“Program implementation has been strong. All quantitative performance criteria have been met. In spite of the challenging domestic and regional environment, structural reforms have been progressing, and the authorities have made up for earlier delays in some areas.

“Fiscal performance for the first half of the year has been strong, and continued fiscal consolidation remains essential to anchor macroeconomic stabilization. Fiscal measures to offset spending pressures are welcome, and recent increases in energy prices—together with the implementation of new programs to protect the poor— will help reduce vulnerabilities. Energy subsidy reform and a strict control of the wage bill will improve budget composition, which will also benefit from increased social and investment expenditures. Comprehensive revenue reforms, strengthened public financial management, and reform of public enterprises will support fiscal consolidation and help generate more inclusive growth.

“A tighter monetary policy would help counter inflationary pressures and reduce exchange rate pressures. Further exchange rate flexibility would help rebuild foreign reserve buffers, correct large external imbalances, and improve competitiveness.

“Important steps have been taken to reduce financial sector vulnerabilities, including through the historic adoption of public bank restructuring plans, which should be quickly implemented. Banking sector fragilities will be reduced further through the establishment of an asset management company, adoption of the bankruptcy law, completion of public bank audits, and upgrade of the regulatory framework.

“Accelerated implementation of structural reforms is needed to improve the investment climate and generate a stronger and more inclusive growth. Moving ahead with the competition law and the public private partnerships framework will help foster private sector development. The upcoming “Invest in Tunisia” conference should play an important role in this regard.”